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What Happens To Credit Card Debt When You Die?

If you die with unpaid credit card debt, what happens to it? Whether it must be paid and by whom, depends upon several factors. A common misconception is that your credit card debt will be inherited by your spouse or heirs, requiring them to pay off the debt. Under the laws of the State of Michigan, the only time another person, including a spouse, is required to pay the debt, is if the debt was a joint obligation, or if someone co-signed the debt. For example, if you and your spouse have a joint credit card (upon which you are both account holders), then the surviving spouse remains liable for the entire debt. If the debt was solely in the name of the deceased, no one else can be made to make payment of the debt. Debt collectors may try to make your heirs believe otherwise, but it is imperative that you know your rights.

However, creditors can make a claim and seek repayment from the Estate of a of the debtor. For example, if a person dies leaving $10,000 in credit card debt and has $100,000 in estate assets, estate assets may be used to pay the debt, provided the creditor follows the necessary steps to obtain payment. If a debtor dies leaving more debt than assets and there is no joint card holder, the credit card company is typically unable to collect the debt.

If a loved one dies and you receive calls from a debt collector, it is important that you know your rights. Debt collectors often call the loved ones of a deceased debtor in an attempt to obtain payment. Typically, they play on your sense of “fairness” and try to get someone to pay the bill, even though that person may not be legally responsible for the debt. If you receive such a call, do not make payment. You should contact an attorney to discuss your rights and obligations.